SIE practice questionmediumOptions – Time and Intrinsic Value
An investor holds a call option with a strike price of $50 when the underlying stock is trading at $60. What is the intrinsic value of the option?
- A$50
- B$0
- C$10✓ Correct answer
- D$60
Explanation
Why C — $10
The intrinsic value is the difference between the stock price ($60) and the strike price ($50), or $10. The other options represent incorrect calculations.
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